2015 Trends: More Phones & More Drones

If you have yet to check out the 'Mary Meeker Internet Trends 2015 Report', I certainly suggest reading through the presentation. To spare you some time however, I'd like to share a few key themes that stood out to me, offering vast potential for new business and multi-billion dollar markets untapped in the years ahead.

Let's start with mobile. Phones are bigger, faster, and attached to our hips every breathing second. Meeker's stats point out various indicators of mobile growth and internet adaption, but a massive ad spending gap in the mobile space is the highlight. Of all media channels in the United States, Americans spend roughly 24% of their time on their phones (television still dominates). With only 8% of Americans actually seeing mobile ads, Meeker estimates the 16% differential at an opportunity of ~$25 billion dollars. All signs point to more reliance on our smartphones as they pack faster chips and bigger screens, so let's just say the mobile ad industry has barely scratched the surface. The platform owners these mobile ads will be displayed on have a hefty payday coming and some of these companies may not even emerge in the immediate future. A 10-second YouTube ad today could be looked as a luxury in a few years from now...

The second trend that caught my eye was the evolution of drone technology. I have never bought into drones as a warfare tool or chose a side on the ethics of the matter, but Meeker's data rethinks how drones can be used for far more positive outcomes, including everyday business activities. You may first think of how exciting (and futuristic) an Amazon shipping drone may be, but the privacy and air space restrictions undoubtedly muddy the business waters. Mary identifies how other industries need aerial solutions for various business and non-business needs. Construction, utilities, and disaster recovery all lack the aerial assistance a drone can provide. Surveying underground gas pipes for an area of land or reviewing a construction site progress 300 feet in the air screams opportunity. Disaster recovery was the kicker for me, as drones are being used as I type this to find missing persons following the Nepal earthquake.

Just sharing some thoughts, hope you enjoy!

Thoughts on Google's Project Fi

Google's recent release of Project Fi once again proves Google's tenacity to be first to market in a specific tech space and drive (some would say force...) the industry to progress with them. Although they will never publicly state this approach to business it is the core of how they operate. This strategy time and time again proves massive profits up front, following a quiet ramp down of service and concept maturity once the industry has adjusted.

SIM Card Technology & Offering

Project Fi is a bold move towards a world of a carrier-less phone plan and an infrastructure that meets many individual needs. The flat fee (and it is cheap!) favors a standard pay-per-gigabyte model but also poses an incentive for customers who do not go over their threshold through a credit reward. Your phone will almost always have a signal due to service agreements with T-Mobile & Sprint, as the phone's SIM card will choose the strongest signal while also weighing public WiFi as an option. Think of Google's offering as a humongous mesh network and your phone bounces off different towers and routers as you move. Unfortunately, this special SIM card is only in Google's Nexus 6 devices (and as far we know, designed or manufactured by Google), but one can predict only more Google phones adopting this capability moving forward. Now that I've gushed about a few reasons why Project Fi would be the obvious over your current carrier today, I bring you my red flags...

Stud or Dud?

Google selling hardware is somewhat a new phenomenon, but google selling the data and cell service to their hardware is entering a new realm of possibilities. And with possibility, come major challenges...here are my top concerns:

1. Security - If a phone is constantly connecting to different cell towers or public WiFi networks, what does this mean for privacy? Sure the connection is passing through some encrypted tunnel but public WiFi immediately flags issues for my own personal reasons. I'm not saying my privacy agreement with Verizon is fabulous today, but mixing in public WiFi would not help me sleep at night.

2. Reliability - Let's be honest, Sprint and T-Mobile are not prime service players because their cell service is spotty and lack a constant 4G/LTE connection. Signal strength in the city is fair, but Project Fi would rely on public routers in dense areas and cell towers in rural territory. I can't say I'm quite ready to rely on a combination of two spotty service providers for my phone...

3. Device Battery - Perhaps I am missing some technological understanding, but my personal experience and attentiveness to mobile innovation suggest to turn on/off your cell chip or WiFi chip to conserve your smartphone battery. Although the Nexus 6 battery is an improvement  from older models (3220 mAh is a lot of juice), I'm not sure any smart phone battery can pack enough heat to support constant searching, identification, and switching of hundreds of networks in a given day.

Bonus: I can only for see a long and dreadful lawsuit coming from service monopolies like Verizon and Comcast, exposing every loophole imaginable and .muddying the waters for Google and partners to push forward.

Conclusion

With all that being said, Project Fi is a major step in the right direction. Security concerns aside, the model is innovative and the benefit to cost ratio is off the charts. One can hope Fi does not fizzle out like other Google ventures. If it fails, it needs to fail successfully by forcing pressure on carriers to finally change their horrific 'locked-in' contract plans. It has massive business opportunity as well, possibly offering an enormous cost reduction for employee mobile devices depending on industry.

**UPDATE <<4/25/2015>>**

Google's patent for Project Fi's architecture and essential inner workings has recently surfaced and can be found here. This patent was filed in October 2011, inferring Google's plan to enter the telecommunications space as a service provider (in some form) has been a long time coming.

Why The MLS Will Be Huge

Every year Major League Soccer remains as the punch line of all tacky sports jokes, while the public jabs at the sport itself or why America just 'Does.Not.Care'. But what every soccer hating critic leaves out of the argument is the raw data. An average attendance of 19,000 fans per match, emergence of multiple soccer specific stadiums, and two new teams in popular markets are paving the way for the MLS to be huge.

Attendance

No one is arguing the NFL is America's most popular sport. The television contracts and advertising opportunity alone blows most leagues out of the water, and attendance surpasses 50,000 most anywhere in the country. The MLB is a surprising second in average league attendance, but the variance of a 35,000 sold out Red Sox game and a struggling crowd of 8,000 in Miami is disheartening. Where else does this leave us but Major League Soccer surpassing both the NHL and the NBA in average game attendance. Sure there are less games in a season, but isn't that how sports like football became so popular in the first place?

Each game means more than the last, and with a regular season of 32 games you can get a taste of why the UK is a slave to soccer on the weekends. It is hard to explain, but each MLS match feels like the most important one, and bring out the best in the team's fan base with an atmosphere that is more electric than sleepy.

Grow, Grow, Grow

Like any professional sports league, the ability to scale as an organization is a difficult task. With factors of location, fan interest, investor/operator selection, and more, the clip at which the MLS is investing in league growth is fast. New York City FC and Orlando City SC have been worthy competitors since the 2015 season start and have attracted world soccer stars like David Villa and Kaka. Los Angeles and Atlanta are also receiving future teams, proving the demand for the sport is high and large cities like LA can indeed support two teams.

Playing Catch Up

Call it 'catching up' or what you will, but the United States' investment in soccer dates back to the early 1990's, when the MLS was chosen as the premier home grown league to develop a reputable USA team come the 1994 World Cup (hosted in the US). While most of the wold remains decades ahead of America in soccer tradition and skill, the MLS product is nothing to sleep on. New television contracts with ESPN, Fox Sports One, NBC Sports, & Unimas are raking in the dough. Ticket sales and apparel revenue is at an all time high. Star players in Europe are receiving competitive MLS offers in the millions and the average player salary is on the rise.

All things are looking up for Major League Soccer, yet nobody wants to admit it. The league has captured the most important fan base in the country, a demographic comprised of 18 to 35-year-olds who are organically creating the traditions that could last for decades. Never a soccer fan in my youth, the MLS was an easy league to gravitate to and extremely cost effective for catching a live game ($250 total for 18 home games for my team). I am a football / baseball / hockey fan as much as the next person, but there is something new and refreshing about the MLS that screams prosperity.

Investing In Tech Platforms & Vision

Ever since high school I have been fascinated with technology and the potential of the internet, but I could never put that knowledge to use when it came to personal financial gain. I'd poke my dad, "Hey, Buy Apple!, Buy Google!, Buy Tesla!". Anything over $30 per share seemed risky to throw a few thousand at, and I had no more than $3000 to my name. Even with minimal knowledge of how the stock market worked, the price of these shares rose and I continued to miss out.

Now that I have a steady income and the 2012 JOBS Act has paved the way for companies like Twitter and Box to go public, things have changed. My investment in Twitter and other technology stocks has proved a 21% gain in just the first two months. Although neutrul on Box Inc, emerging players like Twilio and investing group GSV Capital have caught my eye. There is something all these tech companies share in common, they have a growing platform.

When I say platform, I'm referring to the open source software offering that companies have learned to scale and pivot for high capability. Just how apps like Uber utilizes Apple Maps or Instagram sits on Facebook's platform, I'm gung ho on investing in the technology upon which new opportunity relies on. The open nature of a company's platform can allow it to grow quickly as new apps are built upon it and demand grows for more features. It is incredible how years ago the internet is what flipped the booming technology business, but the open offerings of Google, Twitter, Facebook, and more are now just as important. Twilio is shaping up to be the next major platform player, and fortunately this is just the beginning.

The winning formula of these large platforms looks something like this, and note not all of these companies fit into the social media matrix:

Software is:
- Open
- Scalable
- Swift to change upon needs of user
- Secure
- Owns a social or front-facing offering

The correlation of companies with emerging platforms and their stock price is striking. It is not to say a company built on one of these platforms is a bad stock, but to highlight why the underlying technology may always be king. Vision of these companies is what continues to impress me year after year. Their flexibility and ability to adapt to the needs of their users, clients, and constantly changing internet landscape keeps them successful.

Happy Trading.